French workers were in mourning yesterday for their cherished but controversial 35-hour week, after Nicolas Sarkozy's centre-right party pushed through an employment reform that effectively kills off one of the socialist era's defining policies.

The law, due to come into effect as early as August, will allow companies to decide how many hours and how much overtime their employees clock up every week. Instead of the current maximum of 218 days a year, white-collar workers could be expected to work as many as 235 days.

Sarkozy, who was elected last year with the campaign slogan "work more to earn more", regards the 35-hour week as a major drag on the French economy, arguing that those who want to work more should not be stopped from doing so.

Xavier Bertrand, the employment minister, said yesterday that the vote was a step on France's road to modernisation. "We wanted to put an end to the rigidity of the job market," he told French radio. "Before, you had a situation where employees who wanted to work more couldn't, and they couldn't earn more."

But the law was greeted with scepticism by unions and leftwing politicians, who voted against what one described as a project that would "inevitably lead to the worsening of employees' working conditions". Martine Billard, a Green MP, attacked the "vengeful spirit" of Sarkozy's UMP for getting rid of the flagship socialist policy and effectively authorising a working week of 48 hours. "All those social battles have gone up in smoke," she said.

The 35-hour week, brought in 10 years ago by Lionel Jospin's Socialist government, has retained its popularity among most workers, even though in practice many of them often exceed their limit. Supporters say it has created more jobs and allowed them to maintain a better work/life balance than other countries.

Sarkozy, who came to power promising a "rupture" with France's past, has argued the cap on hours hampers productivity. However, aware that many voters see it as an integral part of their lifestyle, he has not abolished the limit altogether. Rather, the measures allow companies to strike deals with unions and employees on a maximum number of working days and overtime. Employers will be able to negotiate a working week of 48 hours, with every hour over 35 counted as overtime.

Unions said smaller companies would be most affected by the changes because it would be easier to make arrangements between their staff and management. "In the big companies, no one wants to renegotiate the 35 hours and reopen Pandora's Box," said Philippe Jaeger of the CFE-CGC union. "But in the small and mid-sized firms, it will be different."

Also voted into law was a reform which aims to lower unemployment by taking away benefits from anyone who refuses two offers of work that the authorities deem "reasonable".